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When you need to protect the privacy of an email message, encrypt it. Encrypting an email message in Outlook means it's converted from readable plain text into scrambled cipher text. Only the recipient who has the private key that matches the public key used to encrypt the message can decipher the message for reading. Any recipient without the corresponding private key, however, sees indecipherable text.

This article is specifically about encrypting and digitally signing a message with S/MIME. To understand the full list of email encryption options go to the article on Email Encryption in Office 365.

What happens if the recipient doesn't have the corresponding private key? The recipient will see this message:

"This item cannot be displayed in the Reading Pane. Open the item to read its contents."

And if the recipient tries to open the item, a dialog box opens with this message:

"Sorry, we're having trouble opening this item. This could be temporary, but if you see it again you might want to restart Outlook. Your Digital ID name cannot be found by the underlying security system."

Sending and viewing encrypted email messages requires both sender and recipient to share their digital ID, or public key certificate. This means that you and the recipient each must send the other a digitally signed message, which enables you to add the other person's certificate to your Contacts. You cant encrypt email messages without a digital ID.

If you send an encrypted message to a recipient whose email setup doesnt support encryption, you're offered the option of sending the message in an unencrypted format.

Any attachments sent with encrypted messages also are encrypted.

In message that you are composing, click File > Properties.

Click Security Settings, and then select the Encrypt message contents and attachments check box.

Compose your message, and then click Send.

When you choose to encrypt all outgoing messages by default, you can write and send messages the same as with any other messages, but all potential recipients must have your digital ID to decode or view your messages.

On the File tab. choose Options >Trust Center > Trust Center Settings.

On the Email Security tab, under Encrypted email, select the Encrypt contents and attachments for outgoing messages check box.

To change additional settings, such as choosing a specific certificate to use, click Settings.

In the message that you're composing, on the Options tab, in the More Options group, click the dialog box launcher in the lower-right corner.

Click Security Settings, and then select the Encrypt message contents and attachments check box.

Compose your message, and then click Send.

When you choose to encrypt all outgoing messages by default, you can write and send messages the same as you do with any other messages. All potential recipients, however, must have your digital ID to decode or view those messages.

On the File tab, click Options > Trust Center > Trust Center Settings.

On the E-mail Security tab, under Encrypted e-mail, select the Encrypt contents and attachments for outgoing messages check box.

To change additional settings, such as choosing a specific certificate to use, click Settings.

In the message, on the Message tab, in the Options group on the ribbon, click the Encrypt Message Contents and Attachments button .

Note:If you don't see this button, click the Options Dialog Box Launcher in the lower-right corner of the group to open the Message Options dialog box. Click the Security Settings button, and in the Security Properties dialog box, select Encrypt message contents and attachments. Click OK, and then close the Message Options dialog box.

Compose your message and send it.

Choosing to encrypt all outgoing messages means, in effect, your e-mail is encrypted by default. You can write and send messages the same as with any other e-mail messages, but all potential recipients must have your digital ID to decode your messages.

On the Tools menu, click Trust Center, and then click E-mail Security.

Under Encrypted e-mail, select the Encrypt contents and attachments for outgoing messages check box.

To change additional settings, such as choosing a specific certificate to use, click Settings.

Click OK twice.

See more here:
Encrypt email messages - Outlook